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UPDATE 1-Portugal's BCP easily raises 2.25 bln euros despite BES woes
July 22, 2014 / 4:42 PM / 3 years ago

UPDATE 1-Portugal's BCP easily raises 2.25 bln euros despite BES woes

(Adds quote by CEO, analyst)

By Andrei Khalip

LISBON, July 22 (Reuters) - Portugal’s second-largest listed bank, Millennium bcp, easily raised 2.25 billion euros ($3.03 billion)in capital from existing shareholders, despite concerns about its rival BES that weighed on the country’s banking sector shares in recent weeks.

“We are very satisfied ... This operation was carried out in a complex and turbulent moment, but investors showed confidence in our restructuring plan,” Chief Executive Officer Nuno Amado said in emailed comments on Tuesday.

Investors lodged bids for 26 percent more new shares than were on offer. BCP sold 98.8 percent of all the shares to investors taking up the shares they were allocated, and the rest through subsequent demand that far outstripped the leftover shares.

The new shares were priced at 0.065 euros, a 34 percent discount to the share price before the announcement of the rights issue last month and a 37 percent discount to their price on Tuesday.

Shares in Millennium have dropped 12 percent since the rights to subscribe to the shares started to trade on July 4 as concerns over BES hit other Portuguese banks.

BES completed a 1 billion euro capital hike on June 11, just before financial problems at holding companies of BES’ founding family wiped out around 60 percent of the share price of Portugal’s largest listed bank and briefly roiled global markets on concerns about Portugal.

The government and the Bank of Portugal have said BES is solvent and the financial system is safe.

“BES problems have affected market sentiment in Portugal, so it was a more complicated environment for the BCP rights issue,” said Albino Oliveira, an analyst at Fincor brokers.

“But the fact that they are repaying the state loans is seen as a strong point that fits well into their restructuring process, quite different from the BES situation. That feeling was probably enough to guarantee no underwriting.”

Banks running the rights issue had agreed to buy the shares if investors wouldn‘t, a process known as underwriting.

BCP said it wants to repay as much as 1.85 billion euros in state loans held in so-called contingent convertible bonds that carry high interest and so weigh on earnings. It expects the repayments to lead to major profitability and capital ratio improvements by 2017.

$1 = 0.7427 Euros Reporting By Andrei Khalip; Editing by Laura Noonan

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